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Background: The ISPOR Special Task Force (STF) on US Value Assessment Frameworks was agnostic about exactly how to implement the quality-adjusted life year (QALY) as a key element in an overall cost-effectiveness evaluation. But the STF recommended using the cost-per-QALY gained as a starting point in deliberations about including a new technology in a health plan benefit. The STF offered two major alternative approaches—augmented cost-effectiveness analysis (ACEA) and multi-criteria decision analysis (MCDA)—while emphasizing the need to apply either a willingness-to-pay (WTP) or opportunity cost threshold rule to operationalize the inclusion decision. Methods: The MCDA model uses the multi-attribute utility function. The ACEA model is based on the expected utility theory. In both ACEA and MCDA models, value trade-offs are derived in a hierarchical model with two high-level objectives which measure overall health gain separately from financial attributes affecting consumption. Results: Even though value trade-offs can be elicited or revealed without considering budget constraints, we demonstrate that they can be used similarly to WTP-based cost-effectiveness thresholds for resource allocation decisions. The consideration of how costs of medical technology, income, and severity of disease affect value trade-offs demonstrates, however, that reconciling decisions in ACEA and MCDA requires that health and consumption are either complements or independent attributes. Conclusions: We conclude that value trade-offs derived either from ACEA or MCDA move similarly with changes in main factors considered by enrollees and decision makers—costs of the medical technology, income, and severity of disease. Consequently, this complementarity between health and consumption is a necessary condition for reconciling ACEA and MCDA. Moreover, their similarity would be further enhanced if the QALY is used as the key attribute or anchor in the MCDA value function: the choice between the two is a pragmatic question that is still open. [ABSTRACT FROM AUTHOR]

Antimicrobial resistance (AMR) is becoming a major global public health threat and has begun to command attention from European and US policy makers. An initial focus on monitoring AMR and conserving existing treatments by cutting down on misuse has been complemented by moves towards addressing the paucity of new drugs in the R&D pipeline of the pharmaceutical industry. We identify five economic challenges: the utilisation externality; the lack of incentives for R&D arising from use restrictions, low prices, and scientific and regulatory challenges; the global joint sunk nature of R&D cost; the need for access to drugs in middle and low income countries; and failures in the market for point of care diagnostics. We analyse 'push,' 'pull' and hybrid incentives and conclude that higher prices linked to targeted use with diagnostic tests and/or an AMC-based 'prize' for registering (but not necessarily using) desired new drugs would be effective, and could be linked to push measures. US and European collaboration on incentives would be desirable but not if achieving agreement leads to delays. Action on conservation needs to be global and linked to use of new products. This will not be easy given TRIPS provisions and national sensitivities on this issue as seen in the 2010 reaction to evidence on the origins of NDM-1. [ABSTRACT FROM AUTHOR]

Regulatory authorities make difficult risk-benefit decisions when approving new drugs. Food and Drug Administration (FDA) advisory committees and reviewers must consider a complex body of evidence, including efficacy and safety results of trials, disease epidemiology, potential side effects, and patients' needs. However, this menu of information is not usually presented in a consistent and integrated framework. The members of an FDA review panel vote with some unobserved, implicit weighting of the evidence. This paper argues that outcomes research tools for modeling long-term health outcomes, measuring health preferences, and establishing the value of additional information could provide a more structured, transparent, and quantitative process of assessing risk-benefit balance. [ABSTRACT FROM AUTHOR]

Two papers in this volume review efforts worldwide to control the growth of drug spending and discuss the potential role for the U.S. government with respect to rationing of prescription drugs. I put the roles given to government in the two papers in context by focusing on the role of government as a partner with the pharmaceutical industry. I concentrate on the unique features of the prescription drug market, coupled with the fact that government is a payer, regulator, and provider in the health sector. I conclude that the federal government should exercise caution when attempting to regulate prescription drug prices. [ABSTRACT FROM AUTHOR]

There is strong evidence that individuals and the public assign relatively greater value to health gains from relatively more severe health states. This preference is increasingly reflected in health technology assessment, with some consideration of severity incorporated by health technology assessment bodies in, among others, The Netherlands, England and Wales, Norway, Sweden, and the United States. If a societal "severity premium" is to be considered fairly and consistently, we argue that a more explicit and quantitative approach is needed. We highlight drawbacks of categorical approaches, especially discontinuities between severity categories that arguably violate concepts of vertical equity, and argue that a more continuous approach to understanding severity is needed. We also note challenges to more explicit approaches, including implications of a lower threshold for less severe conditions and the relative complexity of calculating a continuous severity adjustment. [ABSTRACT FROM AUTHOR]

Curative therapies and other medicines considered "game-changing" in terms of health gain can be accompanied by high demand and high list prices that pose budget challenges to public and private payers and health systems-the so-called affordability issue. These challenges are exacerbated when longer term effectiveness, and thus value for money, is uncertain, but they can arise even when treatments are proven to be highly cost-effective at the time of launch. This commentary reviews innovative payment solutions proposed in the literature to address the affordability issue, including the use of credit markets and of staged payments linked to patient outcomes, and draws on discussions with payers in the United States and Europe on the feasibility or desirability of operationalizing any of the alternative financing and payment strategies that appear in the literature. This included a small number of semistructured interviews. We conclude that there is a mismatch between the enthusiasm in the academic literature for developing new approaches and the scepticism of payers that they can work or are necessary. For the foreseeable future, affordability pressures will continue to be handled by aggressive price bargaining, high co-pays (in systems in which this is possible), and restricting access to subgroups of patients. Of the mechanisms we explored, outcomes-based payments were of most interest to payers, but the costs associated with operating such schemes, together with implementation challenges, did not make them an attractive option for managing affordability. [ABSTRACT FROM AUTHOR]

The fourth section of our Special Task Force report focuses on a health plan or payer's technology adoption or reimbursement decision, given the array of technologies, on the basis of their different values and costs. We discuss the role of budgets, thresholds, opportunity costs, and affordability in making decisions. First, we discuss the use of budgets and thresholds in private and public health plans, their interdependence, and connection to opportunity cost. Essentially, each payer should adopt a decision rule about what is good value for money given their budget; consistent use of a cost-per-quality-adjusted life-year threshold will ensure the maximum health gain for the budget. In the United States, different public and private insurance programs could use different thresholds, reflecting the differing generosity of their budgets and implying different levels of access to technologies. In addition, different insurance plans could consider different additional elements to the quality-adjusted life-year metric discussed elsewhere in our Special Task Force report. We then define affordability and discuss approaches to deal with it, including consideration of disinvestment and related adjustment costs, the impact of delaying new technologies, and comparative cost effectiveness of technologies. Over time, the availability of new technologies may increase the amount that populations want to spend on health care. We then discuss potential modifiers to thresholds, including uncertainty about the evidence used in the decision-making process. This article concludes by discussing the application of these concepts in the context of the pluralistic US health care system, as well as the "excess burden" of tax-financed public programs versus private programs. [ABSTRACT FROM AUTHOR]

Abstract: Objective: In both the United States and Europe there has been an increased interest in using comparative effectiveness research of interventions to inform health policy decisions. Prospective observational studies will undoubtedly be conducted with increased frequency to assess the comparative effectiveness of different treatments, including as a tool for “coverage with evidence development,” “risk-sharing contracting,” or key element in a “learning health-care system.” The principle alternatives for comparative effectiveness research include retrospective observational studies, prospective observational studies, randomized clinical trials, and naturalistic (“pragmatic”) randomized clinical trials. Methods: This report details the recommendations of a Good Research Practice Task Force on Prospective Observational Studies for comparative effectiveness research. Key issues discussed include how to decide when to do a prospective observational study in light of its advantages and disadvantages with respect to alternatives, and the report summarizes the challenges and approaches to the appropriate design, analysis, and execution of prospective observational studies to make them most valuable and relevant to health-care decision makers. Recommendations: The task force emphasizes the need for precision and clarity in specifying the key policy questions to be addressed and that studies should be designed with a goal of drawing causal inferences whenever possible. If a study is being performed to support a policy decision, then it should be designed as hypothesis testing—this requires drafting a protocol as if subjects were to be randomized and that investigators clearly state the purpose or main hypotheses, define the treatment groups and outcomes, identify all measured and unmeasured confounders, and specify the primary analyses and required sample size. Separate from analytic and statistical approaches, study design choices may strengthen the ability to address potential biases and confounding in prospective observational studies. The use of inception cohorts, new user designs, multiple comparator groups, matching designs, and assessment of outcomes thought not to be impacted by the therapies being compared are several strategies that should be given strong consideration recognizing that there may be feasibility constraints. The reasoning behind all study design and analytic choices should be transparent and explained in study protocol. Execution of prospective observational studies is as important as their design and analysis in ensuring that results are valuable and relevant, especially capturing the target population of interest, having reasonably complete and nondifferential follow-up. Similar to the concept of the importance of declaring a prespecified hypothesis, we believe that the credibility of many prospective observational studies would be enhanced by their registration on appropriate publicly accessible sites (e.g., clinicaltrials.gov and encepp.eu) in advance of their execution. [Copyright &y& Elsevier]

At the heart of all health insurance programs lies ethical tension between maximizing the freedom of patients and clinicians to tailor care for the individual and the need to make healthcare affordable. Nowhere is this tension more fiercely debated than in benefit design and coverage policy for pharmaceuticals. This paper focuses on three areas over which there is the most controversy about how to judge whether drug coverage is appropriate: cost-sharing provisions, clinical eligibility criteria, and economic-step therapy and required switching. In each of these domains we present 'ethical goals for access' followed by a series of 'fair design criteria' that can be used by stakeholders to drive more transparent and accountable drug coverage.

Disclosures: This study received unrestricted funding from the Pharmaceutical Research Manufacturers of America. The authors also do consulting, personally or through their employment, with numerous pharmaceutical manufacturers, payers, and other stakeholders with a general interest in this subject matter.

Alternative approaches to the current rebate system are being considered by policymakers and stakeholders in the private insurance market. This paper presents an analysis of three alternative options to the current rebate model: retaining retroactive rebates but requiring 100% pass-through of rebates and fees to plan sponsors; retaining retroactive rebates but requiring that patients share in rebates at the point of sale; and eliminating retroactive rebates and replacing the current structure with upfront discounts. Each alternative approach presents a balance of potential advantages and disadvantages. Policymakers should not assume that switching to an alternative rebate model will deliver unalloyed benefits for patients and the health system.

This summary section first lists key points from each of the six sections of the report, followed by six key recommendations. The Special Task Force chose to take a health economics approach to the question of whether a health plan should cover and reimburse a specific technology, beginning with the view that the conventional cost-per-quality-adjusted life-year metric has both strengths as a starting point and recognized limitations. This report calls for the development of a more comprehensive economic evaluation that could include novel elements of value (e.g., insurance value and equity) as part of either an "augmented" cost-effectiveness analysis or a multicriteria decision analysis. Given an aggregation of elements to a measure of value, consistent use of a cost-effectiveness threshold can help ensure the maximization of health gain and well-being for a given budget. These decisions can benefit from the use of deliberative processes. The six recommendations are to: 1) be explicit about decision context and perspective in value assessment frameworks; 2) base health plan coverage and reimbursement decisions on an evaluation of the incremental costs and benefits of health care technologies as is provided by cost-effectiveness analysis; 3) develop value thresholds to serve as one important input to help guide coverage and reimbursement decisions; 4) manage budget constraints and affordability on the basis of cost-effectiveness principles; 5) test and consider using structured deliberative processes for health plan coverage and reimbursement decisions; and 6) explore and test novel elements of benefit to improve value measures that reflect the perspectives of both plan members and patients., (Copyright © 2018 International Society for Pharmacoeconomics and Outcomes Research (ISPOR). Published by Elsevier Inc. All rights reserved.)

The fifth section of our Special Task Force report identifies and discusses two aggregation issues: 1) aggregation of cost and benefit information across individuals to a population level for benefit plan decision making and 2) combining multiple elements of value into a single value metric for individuals. First, we argue that additional elements could be included in measures of value, but such elements have not generally been included in measures of quality-adjusted life-years. For example, we describe a recently developed extended cost-effectiveness analysis (ECEA) that provides a good example of how to use a broader concept of utility. ECEA adds two features-measures of financial risk protection and income distributional consequences. We then discuss a further option for expanding this approach-augmented CEA, which can introduce many value measures. Neither of these approaches, however, provide a comprehensive measure of value. To resolve this issue, we review a technique called multicriteria decision analysis that can provide a comprehensive measure of value. We then discuss budget-setting and prioritization using multicriteria decision analysis, issues not yet fully resolved. Next, we discuss deliberative processes, which represent another important approach for population- or plan-level decisions used by many health technology assessment bodies. These use quantitative information on CEA and other elements, but the group decisions are reached by a deliberative voting process. Finally, we briefly discuss the use of stated preference methods for developing "hedonic" value frameworks, and conclude with some recommendations in this area., (Copyright © 2018 International Society for Pharmacoeconomics and Outcomes Research (ISPOR). Published by Elsevier Inc. All rights reserved.)

Aims: To explore the challenges presented by gene therapies, discuss potential solutions, and present policy recommendations., Methods: A review of the literature and series of expert interviews were conducted and discussed at a Policy Forum convened by The Institute for Clinical and Economic Review (ICER). The Policy Forum was attended by independent experts and senior representatives from 20 payer organizations and life sciences companies., Results: Three categories of challenges are identified: evidence generation, assessing value and affordability. Possible solutions and policy recommendations are presented for each of the three main categories of challenges., Conclusions: Gene therapies present exciting opportunities, but also pose major challenges. Dialogue between manufacturers and payers around the issues and possible solutions is crucial.

Aim: To explore the potential of indication-specific pricing (ISP) of pharmaceuticals and to discuss prospects for implementation in the US healthcare system., Materials & Methods: The Institute for Clinical and Economic Review convened a policy forum with 44 healthcare leaders from 22 payer and life sciences companies. Models of ISP were discussed., Results: Payers and drug manufacturers saw the potential benefits of an ISP system that balances affordability for payers, sustainability for manufacturers and access for patients. The US healthcare system presents many challenges to implementation, including potential conflicts with existing pricing policies (Medicaid Best Price, average sales price and 340B) and insufficient data systems and analytic capabilities., Conclusion: Possible solutions and policy recommendations for payers and manufacturers are provided.

Aim: Explore key factors influencing future expectations for the production of evidence from comparative effectiveness research for drugs in the USA in 2020 and construct three plausible future scenarios., Materials & Methods: Semistructured key informant interviews and three rounds of modified Delphi with systematic scenario-building methods., Results & Conclusion: Most influential key factors were: health delivery system integration; electronic health record development; exploitation of very large databases and mixed data sources; and proactive patient engagement in research. The scenario deemed most likely entailed uneven development of large integrated health systems with pockets of increased provider risk for patient care, enhanced data collection systems, changing incentives to do comparative effectiveness research and new opportunities for evidence generation partnerships.

There is a significant and growing interest among both payers and producers of medical products for agreements that involve a "pay-for-performance" or "risk-sharing" element. These payment schemes-called "performance-based risk-sharing arrangements" (PBRSAs)-involve a plan by which the performance of the product is tracked in a defined patient population over a specified period of time and the amount or level of reimbursement is based on the health and cost outcomes achieved. There has always been considerable uncertainty at product launch about the ultimate real-world clinical and economic performance of new products, but this appears to have increased in recent years. PBRSAs represent one mechanism for reducing this uncertainty through greater investment in evidence collection while a technology is used within a health care system. The objective of this Task Force report was to set out the standards that should be applied to "good practices"-both research and operational-in the use of a PBRSA, encompassing questions around the desirability, design, implementation, and evaluation of such an arrangement. This report provides practical recommendations for the development and application of state-of-the-art methods to be used when considering, using, or reviewing PBRSAs. Key findings and recommendations include the following. Additional evidence collection is costly, and there are numerous barriers to establishing viable and cost-effective PBRSAs: negotiation, monitoring, and evaluation costs can be substantial. For good research practice in PBRSAs, it is critical to match the appropriate study and research design to the uncertainties being addressed. Good governance processes are also essential. The information generated as part of PBRSAs has public good aspects, bringing ethical and professional obligations, which need to be considered from a policy perspective. The societal desirability of a particular PBRSA is fundamentally an issue as to whether the cost of additional data collection is justified by the benefits of improved resource allocation decisions afforded by the additional evidence generated and the accompanying reduction in uncertainty. The ex post evaluation of a PBRSA should, however, be a multidimensional exercise that assesses many aspects, including not only the impact on long-term cost-effectiveness and whether appropriate evidence was generated but also process indicators, such as whether and how the evidence was used in coverage or reimbursement decisions, whether budget and time were appropriate, and whether the governance arrangements worked well. There is an important gap in the literature of structured ex post evaluation of PBRSAs. As an innovation in and of themselves, PBRSAs should also be evaluated from a long-run societal perspective in terms of their impact on dynamic efficiency (eliciting the optimal amount of innovation)., (Copyright © 2013 International Society for Pharmacoeconomics and Outcomes Research (ISPOR). Published by Elsevier Inc. All rights reserved.)

This paper reviews the economic case for patents and the potential for differential pricing to increase affordability of on-patent drugs in developing countries while preserving incentives for innovation. Differential pricing, based on Ramsey pricing principles, is the second best efficient way of paying for the global joint costs of pharmaceutical R&D. Assuming demand elasticities are related to income, it would also be consistent with standard norms of equity. To achieve appropriate and sustainable price differences will require either that higher-income countries forego trying to "import" low drug prices from low-income countries, through parallel trade and external referencing, or that such practices become less feasible. The most promising approach that would prevent both parallel trade and external referencing is for payers/purchasers on behalf of developing countries to negotiate contracts with companies that include confidential rebates. With confidential rebates, final transactions prices to purchasers can differ across markets while manufacturers sell to distributors at uniform prices, thus eliminating opportunities for parallel trade and external referencing. The option of compulsory licensing of patented products to generic manufacturers may be important if they truly have lower production costs or originators charge prices above marginal cost, despite market separation. However, given the risks inherent in compulsory licensing, it seems best to first try the approach of strengthening market separation, to enable originator firms to maintain differential pricing. With assured market separation, originators may offer prices comparable to the prices that a local generic firm would charge, which eliminates the need for compulsory licensing. Differential pricing could go a long way to improve LDC access to drugs that have a high income market. However, other subsidy mechanisms will be needed to promote R&D for drugs that have no high income market.